GOP senator: Credit agencies being misinterpreted

Sen. Rob Portman (R-Ohio) signaled Wednesday that recent credit agency warnings to the U.S. were as much about getting the nation’s books in order as avoiding default. 

Responding to Fitch’s warning that even a “technical” default would put the American credit rating in danger, Portman said at a Capitol news conference that the statements from the major credit raters were being somewhat misinterpreted. 

“It is important for us to pay our debts and to resolve this issue,” said Portman, a former budget director under President George W. Bush. “But if we do it without dealing with the fiscal problems, we will have some of the consequences that S&P, Moody’s and now Fitch are talking about.”

Portman also stressed that he had not yet read the Fitch report, but added that it was more evidence that the sort of spending cuts that Republicans are calling for in order to raise the $14.3 trillion debt ceiling were necessary. The Treasury Department has said that the limit needs to be increased by Aug. 2. 

“I think most investors and the market, I think, understand we have adequate revenue to handle the interest to the bond holders,” he said. 

Moody’s said recently that the U.S. rating could be placed on negative watch if debt ceiling talks don’t seem to be progressing, while S&P decreased its outlook on U.S. debt to “negative” in April.

For his part, Douglas Holtz-Eakin, an adviser to Sen. John McCain’s (R-Ariz.) 2008 presidential campaign, said the Fitch statement was further proof that officials need to act. 

“There ought to be tremendous urgency,” Holtz-Eakin said at the news conference.